From 1 April 2018 all privately rented properties must have a minimum energy performance rating of “E”.

This means landlords must make improvements to homes, upgrading insulation or heating systems for example, which should make them cheaper to heat.

The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020.

The Government has announced it will be unlawful to rent out a property which breaches this minimum rating, meaning properties which fall in the less efficient “F” or “G” categories will no longer be acceptable.

A civil penalty of up to £4,000 will be imposed for landlords who let homes that fall below the minimum standard.

Which properties are affected by the changes?

The new regulations apply to private, domestic rented properties in England and Wales which are let under an assured tenancy or a shorthold tenancy. The tenancy should be regulated under the Rent Acts including assured agricultural occupancy, protected and statutory tenancies under the Rent Act 1976.

The properties affected are any domestic, privately rented properties which are required by law to have an EPC or are contained within a larger unit which is required to have one. This includes houses, flats and self-contained units but isn’t applicable to bedsits. The EPC cannot be more than 10 years old.

Which properties are excluded?

Protected buildings and structures (such as those with listed status or restricted environmental regulations) are exempt if the measures needed to improve energy efficiency will alter the character or appearance of the building. In addition, temporary structures with intended use times of 2 years or less, residences used for less than 4 months of a year and buildings with floor area of less than 50 square metres are also exempt.

Are there rules about how energy efficiency is improved?

There are no regulations relating to how the energy efficiency rating E is achieved so it is up to the individual landlord what work is carried out on the property. The regulations stipulate that only cost-effective improvements should be made and it’s possible that a landlord could be exempt in some cases. For example, if a landlord can prove that they’ve taken all possible cost-effective measures to make improvements but the rating still remains below E. Or, in some cases, the landlord may be unable to obtain consent from the occupying tenant.

Are there exemptions?

Any properties which are exempt from the new regulations need to be registered on the PRS Exemptions Register. This registration has been open since October 2017. Failure to register will be seen as non-compliance with the regulations. Once a property is assessed and declared exempt this remains valid for 5 years. After that period it would need to be reassessed.

How the regulations are enforced and what are the penalties?

The regulations will be enforced by the local authority who will serve landlords with compliance notices to confirm properties either meet the required standards or have been declared as exempt. If they find a landlord has not complied with either they are able to issue a penalty fine which, cumulatively, could reach up to £5,000. A landlord can request a review of a penalty notice followed by an appeals process if they are still not satisfied with the local authority’s decision.

There are several improvements you can make to a property which will improve the energy efficient rating and many are very simple to carry to out. You could improve the energy efficiency of your property significantly by:

Replacing a non-condensing boiler with a new condensing, A rated boiler with over 90% energy efficiency.

Installing or improving insulation in walls, roof, and loft spaces, pipework etc. to prevent heat loss. You may even be able to qualify for a free insulation grant to help with the cost.

Installing solar panels and a solar energy storage system to reduce the property’s energy dependence on the National Grid

Installing double glazed windows to reduce the amount of heat escaping through poorly fitted frames or basic single glazing.

If you wish to discuss any of this further then please contact us 0116 2423400

From 1 April 2018 the National Living/Minimum Wage rates will increase as follows:

£7.83 an hour for workers aged 25 and over – previously £7.50

£7.38 an hour for workers aged 21 to 24 – previously £7.05

£5.90 an hour for workers aged 18 to 20 – previously £5.60

£4.20 an hour for workers aged 16 to 17 – previously £4.05

£3.70 an hour for apprentices under 19 or in their first year – previously £3.50

If you are paying any employees with reference to the National Living/Minimum Wage you will need to amend the hourly rates accordingly.

Auto-enrolment: Minimum contributions increase with effect from 6 April 2018.

Under auto-enrolment all employers have to automatically enrol certain employees into a pension scheme and make minimum contributions into that scheme. From 6 April 2018 these minimum contributions will increase as part of the phasing in, and employers need to take steps now to ensure they comply with this change.

If the qualifying earnings basis is being used, the current minimum contribution until 5 April 2018 is 2% with at least 1% from the employer.

Between 6 April 2018 and 5 April 2019 the minimum contribution is 5% with at least 2% from the employer, so contributions should be reviewed now in readiness for this.

Looking ahead, from 6 April 2019 the minimum contribution will be 8% with at least 3% from the employer.

For more information see The Pensions Regulator contribution levels guidance here.

If you have any questions on the above, please do not hesitate to contact me.

With the self-assessment tax return deadline now well passed, we can start to look forward to 2017-18’s income and consider whether you are fully utilising your tax free allowances.

Using the following to their full potential can often be the most tax efficient way of accessing the income in your company or savings.

Personal Allowance

This is a tax free amount that everybody starts with which can be used against any type of income. For 2017-18 the personal allowance is £11,500, however, this figure may be reduced should your income go above £100,000.

If you are not using the entire personal allowance, then it may be an option to transfer 10% of this to your spouse under the marriage allowance. This can only be done though if they’re a basic rate tax payer. It means that they would receive an additional £1,150 of personal allowance thus saving them £230 in tax.

Starting Rate

For those that have a fairly minimal salary but a lot of savings income, the starting rate is something that can be used. It is an additional 0% rate band if the first £5,000 of taxable income (i.e above the personal allowance) is savings. This could be especially useful for those with large credit balances on director’s loans in limited companies as they can charge interest on this which would not only be tax free for the individual but tax deductible for the company.

Dividend Allowance

Changes in the 2016-17 tax year meant that the traditional method of receiving tax credits on dividends were scrapped and replaced instead with the ‘Dividend Allowance’. This is a £5,000 tax free band on dividends for everyone regardless of their other income. For those with a limited company this could be utilised by a spouse shareholder, regardless of if the work elsewhere, to get an additional £5,000 tax free income.

Personal Savings Allowance

The final tax free allowance is the personal savings allowance which you receive regardless of if you earn from other sources. These do however vary based on the tax band you are in as follows:

Basic rate

£1,000

Higher rate

£500

Additional rate

Nil

These could potentially be utilised in the same way as the starting rate by charging a limited company interest on credit director’s loan account balances.

As each case is different, please contact us on 0116 242 3400 if you wish to discuss tax free allowances any further.

The Chancellor Philip Hammond presented his Spring Statement on Tuesday 13 March 2018.

In his speech he provided an update on the economy and responded to the Office for Budget Responsibility forecasts. In addition he launched consultations on various aspects of the tax system.

Changes to the timing of tax legislation

Chancellor Philip Hammond has implemented some fundamental changes to the UK fiscal timetable.

In the 2016 Autumn Statement, the Chancellor announced that he would be introducing a new Budget timetable, which would see the main annual Budget moving from its traditional spring setting to the autumn and the Autumn Statement being replaced by a Spring Statement. The first Autumn Budget was presented in November 2017.

The new process

While the general process of developing tax policy will remain the same, the timescales for policy making and consultation have changed significantly. The government hopes that the new system will allow more time to scrutinise and consult on draft tax legislation before it is introduced.

The new timing of the Autumn Budget will allow the announcement of most new measures well in advance of the tax year in which they are due to take effect. The Spring Statement also offers the opportunity for the government to consult during the early stages of policy making, and publish calls for evidence on long-term tax policy issues.

Under the new system, measures announced in the Autumn Budget will generally be consulted on during the winter and spring, with draft legislation being published in the summer, ahead of the introduction of the Finance Bill in the winter. This will then receive Royal Assent the following spring.

A company or association may be ‘dormant’ if it is not trading and doesn’t have any other income – for example from investments.

A dormant company has different obligations for corporation tax, annual accounts and returns for Companies House in comparison to a trading company.

Dormant companies and corporation tax

Your company is usually dormant for corporation tax if:

the company has stopped trading and has no other income

is a new limited company that hasn’t yet started trading

If HMRC think your company is dormant, you may get a letter informing you of the decision to treat the company as dormant, and that you don’t have to pay Corporation Tax nor file Company Tax Returns (form CT600.)

If you have not received a ‘notice to deliver a Company Tax Return’ HMRC can be informed of company dormancy by post or over the phone.

If the company becomes active after a period of dormancy, HMRC must be informed within 3 months.

Dormant companies and VAT

If the company was registered for VAT before becoming dormant the company should deregister for VAT within 30 days of the company becoming dormant, unless there are plans for the company to continue trading in the future, then NIL (empty) VAT returns should be sent while the company is dormant.

Dormant companies and employees

If the company has become dormant and there are no plans to restart trading in the financial year, the PAYE scheme in operation by the company should be closed.

Dormant companies and Companies House

A company must file a confirmation statement (previously an annual return) and annual accounts with Companies House, even if the company is dormant for Corporation Tax, and dormant according to Companies House.

A company is classified as dormant by Companies House if it’s had no ‘significant’ transactions in the financial year. Significant transactions could include operating a payroll, earning interest or paying bank charges and fees. Non-significant transactions that are allowed to be undertaken by a company include:

Payment of shares by subscribers

Fees paid to Companies House for filing a confirmation statement

Late filing penalties paid to Companies House

Companies House do not need to be informed if trading is restarted – the next set of non-dormant accounts filed will show the company is no longer dormant.

If you would like to discuss any of this further then please contact us on 0116 242 3400.

5% late payment penalty on any 2016/17 outstanding tax which was due on 31st January 2018 and still remains unpaid.

This deadline is relevant to individuals who need to complete a self assessment tax return and make direct payments to HMRC in respect of their income tax, Classes 2 and 4 NI, capital gains tax or High Income Child Benefit Charge liabilities.

The balance of any outstanding income tax, Classes 2 and 4 National Insurance, capital gains tax and High Income Child Benefit Charge for the year ended 5th April 2017 was due for payment by 31st January 2018. Where the payment is made late interest will be charged. On 3 March 2018 a late payment penalty of 5% will be added to the outstanding liability.

If we have already dealt with this matter on your behalf you need take no action.

If you would like to discuss any of this further then please contact us 0116 2423400